Blockchain is a recording system that was first developed by the pseudonymous creator of Bitcoin, Satoshi Nakamoto. The premise is simple: transactions are grouped in blocks, validated by miners and stored in a chronological “chain” across all nodes (computers) in a network. This means that the data is widely disseminated and available to all participants.
This is important because all copies of the data must be identical. If a single user tries to edit the information, the network rejects the change and reverts the blockchain to its previous status. In other words, a blockchain is a transparent, secure, and self-managed database. And while these ledgers became famous as the technological foundation for cryptocurrencies, they can be applied to a wide variety of industries.
Notable early adopters of blockchain technology include Microsoft (NASDAQ: MSFT), PayPal Holdings (NASDAQ: PYPL), and salesforce.com (NYSE: CRM). Investors need to know how blockchain can affect the future of these three companies.
In 2018 Microsoft partnered with the UK giant consultancy EY (still known as Ernst & Young) to build a blockchain network that automates the payment of video game royalties. In particular, the network enables intelligent digital contracts to be encoded that execute themselves in transactions, improving transparency and efficiency for Microsoft, game makers and developers.
Publishers can now access license information in minutes instead of the 45 days before. Xbox financial operations are now 70% more efficient, according to Rohit Amberker, chief financial officer of the Royalties and Content Operations team.
This license payment solution is based on Microsoft’s Azure Blockchain Service, a platform that simplifies the development of blockchain networks and applications. But other customers also use the service and their solutions are just as impressive.
For example, General Electric Aviation has built a blockchain network to track aircraft parts. This is important because airlines can only use parts if they know the full story, resulting in significant waste in the aviation industry. With this solution, the company has real-time access to verified data, eliminating the need for inefficient paper-based tracking. According to some analysts, blockchain efficiency gains could improve industry revenue by up to 4% per year, or $ 40 billion.
Starbucks Uses Azure blockchain technologies to ensure products are sourced ethically. With the mobile app, consumers can scan a code on the company’s packaged coffee and find out exactly where the beans were grown. The network also enables farmers to track the movements of their products, which provides valuable transparency. For example, some farmers may not know that their product is suitable for export, so this technology gives them insight into the quality of their beans.
As more companies adopt blockchain-based solutions, Microsoft’s global cloud computing platform should make the company a major player in this space.
PayPal benefits from blockchain in the more traditional sense. In October, the company allowed users in the United States to buy, sell, and hold Bitcoin and three other digital currencies through the PayPal app. The company plans to bring the same functionality to Venmo and the international markets in the coming months.
His fintech rival square has enabled its Cash App users to trade Bitcoin since 2018. Since then, both Cash App users and user engagement have seen an upward trend, which has resulted in a significant increase in Gross Profit.
PayPal is likely to see similar benefits in the coming quarters, but the company has bigger plans. Last month, PayPal launched the Checkout with Crypto service, which allows consumers to make purchases using Bitcoin (and some other digital currencies) directly through the PayPal app. Eventually, the company plans to make this option available to all 29 million merchants.
This would be a big step towards legitimizing cryptocurrency as a means of payment and could be a strong growth driver for PayPal in the coming years.
Salesforce supports its customers in building and maintaining relationships with their own customers. In particular, the Salesforce Customer 360 platform brings together data from sales, customer service, marketing, finance, and other departments so that different teams can easily work together.
As part of Customer 360, Salesforce offers a low-code application platform that anyone can use to develop software, even if they don’t understand computer code.
As a longtime innovator, Salesforce recognized the potential of blockchain in 2019 and integrated it into its low-code platform. Clients can now build networks and applications with blockchain support through Salesforce, similar to the way Microsoft clients use the Azure Blockchain service.
So far, this has not been a significant growth driver, but it does offer considerable added value for the Salesforce platform. Blockchain has the potential to reshape numerous industries, and Salesforce is well positioned to capitalize on this trend.
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